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Monday, February 25, 2008

Some Thoughts on Growth Engines: Telecommunications and Shipbuilding

One of my Google alerts produced an item from the Electronic Times Newspaper 전자신문 that caught my eye. The headline was "Add IT to Shipbuilding." This prompts me to expand on a thought that has been recurring lately, as commentators note the need for Korea to find new growth engines to support future expansion of the economy.I would argue that electronics and information technology is THE fundamental growth engine, not only for South Korea but for all modern economies. In a broader sense, as Wilbur Schramm, a founding father of the field of communication research as a social science, once noted, "communication is the fundamental social process." On the technology side of communications, as a recent op-ed piece in the New York Times put it, "If innovation has a heart, it’s probably a semiconductor, beating to the pace of Moore’s Law." That article goes on to describe how, using nanotechnology, IBM has developed self-assembly techniques that may prolong the life of Moore's law (the prediction that the number of transistors that can be placed on a single chip approximately doubles every 18 months--see graph, courtesy of The Economist).The telecommunications revolution in South Korea, which began in the 1980s, will likely continue for the foreseeable future, driven primarily by developments in information technology. These IT developments will, in turn, provide the basis for advancements in many fields, including nanotechnology, biotechnology, space research, construction, transportation and yes, shipbuilding. The recent report on shipbuilding notes that Korea's world-leading status is threatened because it is sandwiched between China,competitive in price, and European shipbuilders, who lead in the construction of high-value added ships. The solution? Shin Jung-hoon, CEO of Cadwin System, a shipbuilding architecture software developer, said, “Although it is a hefty industry, the shipbuilding industry takes a while to adopt new software. (Korea) is even slower than China, Japan and even Vietnam in introducing new software.” The same article noted that the Electronics and Telecommunications Research Institute (ETRI) had signed an MOU with the Ulsan city government, the Ulsan University and Hyundai Heavy Industry to cooperate in the IT based development of shipbuilding business.In November of 2007, the inter-Korean prime ministers' meeting agreed to begin construction of a shipbuilding factory in Anbyeon in the first half of 2008 and to modernize a ship repair factory in Nampo as soon as possible. Not surprisingly, telecommunications was one of the three main agenda items that North and South Korea discussed to further these joint efforts.And so, the telecommunications revolution in Korea continues to unfold.